The present invention relates to systems and methods for trading. More particularly, the present invention relates to systems and methods for electronic trading where excess profits may be shared amongst members of a trading market.
In recent years, electronic trading systems have gained a widespread acceptance for trading items. For example, electronic trading systems have been created which facilitate the trading of financial instruments such as stocks, bonds, currency, futures, or other suitable financial instruments.
Many of these electronic trading systems use a bid/offer process in which bids and offers are submitted to the systems by a passive side and then those bids and offers are hit and lifted (or taken) by an aggressive side. For example, a passive trader may submit a “bid” to buy a particular number of 30 year U.S. Treasury Bonds at a given price. In response to such a bid, an aggressive trader may submit a “hit” in order to indicate a willingness to sell bonds to the first trader at the given price. Alternatively, a passive side trader may submit an “offer” to sell a particular number of the bonds at the given price, and then the aggressive side trader may submit a “lift” (or “take”) in response to the offer to indicate a willingness to buy bonds from the passive side trader at the given price. In such trading systems, the bid, the offer, the hit, and the lift (or take) may be collectively known as “orders.” Thus, when a trader submits a bid, the trader is said to be submitting an order.
Given the laws of supply and demand, if a first trader desires to buy or sell a particular financial instrument or other item, other traders may modify their prices for that instrument or item to the detriment of the first trader in order to take advantage of that desire—e.g., raise the price so the first trader is required to raise his bid for the item or instrument. In this way, the other traders may distort the market price of the instrument or item away from what the price would be for that instrument or item trading with the same size over varied buyers and sellers. Accordingly, spikes in the market price or temporally high market prices may result for that instrument or item.
Accordingly, it would be desirable to provide systems and methods for electronic trading where excess profits obtained from a sale temporally high prices are redistributed to market participants.